Australian Markets Weekly: Survival of the fittest

The Economist this week carries a topical article on commodities, “Goodbye to all that: a decade of binging on raw materials may leave an even longer hangover”, outlining the pressure on producers now from declining prices.

Survival of the fittest: A postcard from Australia’s resource-centric North West

The Economist this week carries a topical article on commodities, “Goodbye to all that: a decade of binging on raw materials may leave an even longer hangover”, outlining the pressure on producers now from declining prices. And that’s how it’s playing out locally as Australia’s bulk commodity and energy producers seek efficiencies in a survival of the fittest

Having just returned from a visit to the north west of WA – to Karratha and Port Hedland – the pressure is on but activity and exports remains strong. In economic terms, economists call this the net export contribution to GDP, set to continue contributing up to 2 percentage points to GDP, with prospective growth coming from LNG as it takes over from iron ore as the growth driver. (Together with this below postcard from the West, please refer to David deGaris’ presentation, available here, to clients and guests in Karratha and Port Hedland.)

In addition to the presentations and meetings in the North West, we first visited clients in Albany in the South of WA, a town centred around local farming, especially wheat. Growing conditions for the current wheat crop have started positively and a pull-back in labour demand from the mines has freed up costs.

About the Author

Dave is a Director and Senior Economist with the NAB.

His bread and butter work is as a business, treasury or financial markets economist, speaking with clients ranging from the Bank’s agribusiness and corporate clients as well as to institutional clients at home and abroad.

He’s writes for the Bank’s daily and weekly economics and market reports, and speaks with the media, often on a day to day basis speaking about the economy and financial markets.

Dave did his economics apprenticeship with federal governments of various persuasions in Canberra, before he left Canberra in the late 1980s. He finished his indenture in Canberra as a senior economic adviser in the then Prime Minister Bob Hawke’s Department in Canberra, and before that in the Federal Treasury and the Bureau of Statistics.

In today’s Weekly we preview what to expect for the RBA’s forecasts and the narrative and risk around its outlook for the economy. We’re likely to see the Bank wind back the growth outlook and trim its inflation forecasts.